After record capital outflows, stock market turmoil and a renminbi under severe pressure, the world has been waiting for reassuring economic news from China. So much so, that even when Beijing announced the country’s lowest economic growth rate since 1990, investors took comfort and set global equity and oil prices on to a firmer trend.
Some optimism is justified. The official growth rate may have slowed from 7.3 per cent in 2014 to 6.9 per cent last year, but that remains within touching distance of Beijing’s official target of around 7 per cent. There was also unambiguous evidence that China is starting to achieve its long-heralded transition away from investment and heavy industry as the main locomotives for growth in the world’s second-largest economy. The huge steel and power sectors announced a full-year contraction in output volumes.
Equally encouraging for the cause of structural transformation were figures showing that consumer spending contributed 66 per cent of China’s gross domestic product growth, the biggest contribution since 2001. Further underlining this shift, a booming service sector accounted for 50.5 per cent of GDP growth, 10 percentage points more than the once-dominant manufacturing sector.